Last Monday's loss of more than 1% in the S&P 500 and the 2014 new daily closing low got the market's attention but the bulls quickly took over as stocks closed the week well above the worst levels.
The financial media continues to parade a host of bullish analysts ignoring that a few had been predicting horrible crashes over the past six months. The individual investor has become a bit more cautious as according to AAII, just 38.9% are now bullish as opposed to 55% the day after Christmas. It would appear that most have moved to the correction camp as the number of bears is still low at 21.5%.
Though this reading makes a correction less likely over the short term, it is still too high. At last August's lows, when the Spyder Trust (SPY) was at $163, only 29% bullish. Friday's weaker than expected Consumer Sentiment reading from the University of Michigan may help to dampen some investor bullishness.
The poor monthly jobs report was quickly discounted by most economists but if we get another weak jobs report in February, it would be harder to ignore. Friday's Housing Starts showed a decline of 9.8% in December but it will probably take several disappointing economic reports to dampen the high level of bullishness.
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